Commodities Report: Precious Metal Rally & Market Flow
Option flow update: Gold, Silver, Uranium, Palladium, USO
Hello Traders,
The current landscape is a perfect storm of aggressive politics and messy macro, which is exactly the kind of setup that creates the divergences where real money is made (or lost).
1. The Forced Pivot: Trump vs. Powell
The main narrative is the standoff between Trump and the Fed. Trump isn’t just asking for lower rates; he’s attacking the institution head-on (with threats of investigations and heavy rhetoric). The market isn’t reading this just as “rate cuts are coming,” but as “the Fed is losing its independence.”
This triggered a rush into alternative safe havens.
Metals (Gold/Silver): They exploded not just because yields might drop, but because the market is pricing in the risk of dollar debasement. If monetary policy becomes a political tool, gold is the only “currency” they can’t print on command.
Crypto: Bitcoin followed the same logic. Risk-on is back, but it’s a specific kind: you aren’t buying crypto because the economy is booming, but as insurance against institutional chaos. It’s the ultimate “anti-fiat” trade.
2. The Inflation Puzzle (PPI vs. CPI)
This is where it gets tricky.
CPI (Consumers) dropping: This gives Trump the political ammo to say, “See? Inflation is dead, cut the rates!”
PPI (Producers) rising YoY: This is the red flag the real Fed (not the politicized one) is watching. Production costs are climbing. If producers pay more today, consumers pay more tomorrow.
Cutting rates now, with PPI rearing its head, is dangerous—we could be walking into a 1970s-style policy error. But for now, the market only cares about the liquidity Trump is promising to unleash.
3. Iran and Oil: The “Call” from Last Week
We called this right with the options flow. The options market was already pricing in a tail risk that the spot price was ignoring. The tensions in Iran aren’t just background noise; they threaten actual supply. With PPI already running hot, an oil spike is the last thing the Fed needs, but it’s exactly what’s happening.
Rising oil acts like a tax on consumption and pushes “bad” inflation (cost-push) even higher.
The Irony: Trump wants low rates, but geopolitical tension (partly linked to his rhetoric) drives oil up, which logically makes the case for higher rates, not lower.
Now let’s take a look at updated order flow:
